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The Difference between a Bookkeeper, an Accountant, and a CFO
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When most people think of an organization’s financial department, they think of accountants. But did you know there are a variety of financial professionals that are essential to the financial well-being of an organization?
Bookkeepers, accountants, and Chief Financial Officers (CFOs) all serve critical roles in managing an organization’s finances. This guide will walk you through the function of each role and how they compare to one another.
What is a Bookkeeper?
A bookkeeper is a financial professional responsible for recording and managing a nonprofit’s daily financial transitions. Their primary role is to ensure that all transactions are entered into the accounting system with accuracy and consistency. Common nonprofit bookkeeping tasks include:
- Recording donations
- Entering accounts payable and receivable
- Organizing and reviewing bank statements
- Maintaining the general ledger
These everyday financial duties help bookkeepers provide a clear and up-to-date picture of the nonprofit’s financial status. An accurate bookkeeper helps a nonprofit maintain financial transparency and accountability by making it easy to track how funds are received and spent.
What is an Accountant?
Accountants run reports to help determine if the bookkeeping is done correctly. An accountant’s role goes beyond simple record-keeping and might include:
- Creates reconciliations of account balances
- Reviews general ledger activities for accuracy
- Prepare basic financial reports
- Ensures that accounting follows generally accepted accounting principles (GAAP)
Nonprofit accountants use their advanced knowledge of accounting principles and regulations to ensure an organization’s financial practices are sound. They also help nonprofit leaders maintain compliance with legal standards and tax regulations. Properly managing an organization’s taxes helps ensure the nonprofit maintains its exempt tax status.
What is a Chief Financial Officer (CFO)?
A Chief Financial Officer (CFO) is a senior executive in charge of the strategic direction and goal setting of a nonprofit’s accounting and financial management. The CFO role generally includes:
responsible for the strategic direction and goal setting of a nonprofits accounting and financial management. Responsibilities typically include advanced analysis and reporting, budgeting, etc.
- Advanced analysis and reporting
- Budgeting and forecasting
A nonprofit CFO oversees all financial operations to ensure the organization’s financial practices align with its long-term goals and mission. As an executive-level role, the CFO is in charge of guiding the overall financial strategy of the organization.
Nonprofit CFOs are also responsible for clearly and accurately reporting financial data to the board of directors. They will also help guide and advise other key stakeholders such as the nonprofit executive director.
Comparing the Roles of Bookkeeper, Accountant, and CFO
Bookkeepers, accountants, and CFOs all play important roles in the financial health of an organization. Each role provides a unique set of skills and fills various financial needs of an organization.
Let’s take a closer look at the responsibilities, scope of work, and educational requirements for these nonprofit financial roles.
Level of Responsibility
Generally, a bookkeeper has the most direct responsibilities in an organization. Their job is to maintain accurate records of daily transactions. The bookkeeper’s focus on accuracy forms the foundation for all financial activities in the organization.
An accountant takes on a higher level of responsibility than a bookkeeper. Accountants interpret and analyze the financial data provided by bookkeepers to prepare reports and ensure the accuracy of bookkeeping.
The CFO is the top level of responsibility in the financial department of an organization. Thus, the nonprofit CFO carries the most significant responsibility out of the three by overseeing the entire financial strategy and management of the nonprofit. They’ll need to provide strategic planning, financial forecasting, and risk management while working with the board of directors.
Scope of Work
The scope of work for each financial role in a nonprofit reflects the role’s distinct responsibilities and expertise. A bookkeeper’s scope of work is primarily transactional and administrative. For example, recording the day-to-day transactions.
Accountants often have a broader scope of work that involves checking the bookkeeping for accuracy. If mistakes or inaccuracies are found, the accountant often is tasked with correcting issues.
At the highest level, the CFO’s scope of work includes strategic management and leadership. The CFO generally works on high-level projects, such as creating a yearly operating budget.
Educational and Professional Requirements
Most nonprofit bookkeeper roles require a high school diploma or similar, as well as proficiency in accounting software and attention to detail. Some organizations may prefer bookkeepers to have a degree in accounting or related fields. Many nonprofit bookkeepers complete additional on-the-job certification or training programs.
An accountant generally holds a bachelor’s degree in accounting or finance. Some nonprofit accountants are also Certified Public Accountants (CPA), though it’s typically not required.
Educational requirements for a nonprofit CFO often include a bachelor’s degree or higher in accounting, finance, economics, or a related field. However, possessing analytical and strategic thinking skills–along with extensive experience in the nonprofit financial industry–are often more important for CFOs than degrees. Leadership skills are also essential for a CFO, and some nonprofits look for a CFO with an MBA.
Which Financial Professional Does Your Nonprofit Need?
Finding the right financial professional–or combination of professionals–for your nonprofit helps ensure your financials are accurately and efficiently managed. So, do you need a bookkeeper, accountant, or CFO?
The answer is most nonprofits need all of the skills of a bookkeeper, accountant, and CFO in some capacity. Although about 80% of nonprofit accounting work is transactional and can be handled by a bookkeeper, only hiring a bookkeeper means losing 20% of their accounting needs. On the other hand, hiring a CFO to handle all of the day-to-day transactional work of a nonprofit typically leads to burnout and high turnover.
Hiring individuals for each role isn’t feasible for many nonprofit organizations. The solution for many organizations is to outsource their financial needs to a trusted nonprofit accounting firm.
Firms like The Charity CFO provide comprehensive bookkeeping, accounting, and fractional CFO services. Our service team includes an Accounting Associate to handle the day-to-day work and a CFO to handle the strategic side of things. We specialize in nonprofit accounting, so you can be sure we understand the needs and challenges of the nonprofit industry.
Learn more about our nonprofit financial services by contacting us today!
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Nonprofit Fundraising Strategies: Tips for Running an Effective Campaign
Are you looking to raise more money for your nonprofit and bolster your fundraising strategies?
When you run a nonprofit, knowing how to get money from your supporters should consist of one of your chief goals. Many nonprofits become born out of care for certain needs in the world, yet they can’t exist without a solid marketing plan. You need effective fundraising strategies to get the money you need to continue your initiatives and keep your talent.
So, how do you go about getting the proper funding? We’ll go into nonprofit fundraising strategies below. Keep reading to bring in more money for your cause today!
1. Use a Professional Mass Email Service
You may have a great mission, but you won’t attract many donations if your emails don’t look professional. Even if you run a small nonprofit, professionalism inspires confidence in you and your organization.
In turn, this prompts less hesitation about giving. When people believe you operate in a professional manner, they may trust you with more of their funds.
But how do you ensure your emails maintain a professional appearance? Get a mass email service. These platforms allow you to store your contacts’ information and even provide templates you can edit with your own text. This gives your emails a professional look.
2. Use More Than One Platform
If you just advertise your cause via email, you likely aren’t getting the most money you can. Instead, you should seek to get funds from other platforms as well.
You should start out by having a donation page on your website. Make sure people can navigate to this page from any other page on your site. Your donors should have the ability to find it without much effort.
You can also put donation buttons on each of your blog posts or news updates. This encourages people to give to causes after reading about them.
Some people even advertise their causes on social media. To do this, create posts targeted to raising money for specific causes and include links to donate.
3. Create Nonprofit Fundraising Strategies
You shouldn’t create random fundraising opportunities. Instead, fundraising works best when it gets planned out in detail. As such, you should dedicate much of your marketing endeavors toward creating nonprofit fundraising strategies that work for you.
How do you customize your own strategies? A lot of it involves doing research on how well different types of strategies work with your donor base. Any time you try something new, make sure you look at how well people received your new endeavor by viewing your analytics. The best working attempts will result in more donations, shares, or donor interactions.
Then, once you have an idea of what works well, incorporate it into your fundraising strategy.
4. Plan Out Fundraising Campaigns
Fundraising campaigns should comprise a lot of your fundraising strategy.
But what is a fundraising campaign? Think of them as a multi-component attempt to raise money for a specific cause. Fundraising campaigns harness the power of sending email messages to highlight your mission and the initiatives you want your donor base to give to.
For these, you shouldn’t send out one message. Rather, plan out several that build upon each other and encourage your donors to give.
To get the best results, you should start out with a soft launch of your campaign. These launches target only your committed donors. Ask them for feedback on the campaign and pay attention to the issues they raise. Then, you should implement these changes to your campaign before you send it to the rest of your email list.
You should also create thank you notes to send out to people who donate!
5. Know About Prime Fundraising Seasons
Did you know you can maximize your profits by launching campaigns at certain times of the year?
In particular, people like to give before the end of the year because they can claim their donations on their tax forms. Giving Tuesday kicks off this season. It lands on the Tuesday after Thanksgiving, when people follow Black Friday and Cyber Monday with an opportunity to give. You should always start your end-of-the-year campaign on Giving Tuesday.
Then, send messages throughout the month of December. Finish the campaign with a last chance message toward the end of the month, and then follow up with a thank you statement in January.
You can also run fundraising campaigns around holidays.
6. Use Specific Stories
People connect to stories. A well-told story pulls on the heartstrings of your audience and convinces them that they should spend their money giving to your cause.
The more specific the story, the better. Telling the story of one specific beneficiary of your services shows people the impact a donation to your organization can have. These stories also encourage people to put themselves in someone else’s shoes, encouraging empathy and furthering their dedication to your cause.
7. Get Reviewed by a Nonprofit Financial Organization
People want to make sure their money goes to the cause to which they intended to give. Most nonprofits manage their money well, but some don’t, and so it becomes important to have documentation to show how you spend your donations.
To do this, get reviewed by a nonprofit financial organization. These companies focus on reviewing the finances of nonprofit organizations and making this information public for any potential donors. Then, when potential donors contact you asking how you spend your donations, you can send them to the organization’s website so they can view the information for themselves.
This gives your donors confidence in your ability to handle money well and not use it for purposes other than your cause.
Need Nonprofit Financial Services?
Nonprofit fundraising strategies become the crux of many nonprofit organizations. They enable them to raise money for the different initiatives they run and help them keep their lights on.
But you shouldn’t just fundraise and not manage your money. If you need financial assistance for your nonprofit, we offer a full team of accountants who can help you manage the funds you receive. Request a meeting today!
Preparing for a Not-for-Profit Audit: Episode 3 of A Modern Nonprofit Podcast
Do I need to hire a CPA firm for my nonprofit? Why can’t my finance person just take care of and publish my not-for-profit finance statements? Preparing for a not-for-profit audit is not something you should fear.
Plus, these are complex questions that only an expert accountant for charities can answer. There are a lot of standards to follow in finance! Unfortunately, these standards do not get any easier when you are asking if your nonprofit should seek an audit.
Preparing for a Not-For-Profit Audit
In fact, this is why Jeanne Dee, a partner at Anders CPAs + Advisors, was this week’s speaker on Episode 3 of A Modern Nonprofit Podcast. Tosha Anderson’s latest guest dove into the specifics of what a certified public accountant does. Additionally, Jeanne discusses the differences between a review versus an audit. LISTEN TO EP. 3: PREPARING FOR A NOT-FOR-PROFIT AUDIT WITH JEANNE DEE HERE.
Sometimes, different states have different expectations when it comes to the audit of a nonprofit. Nonprofit finances has a lot of standards that you must know! Fortunately, Jeanne highlights the types of expenses, fundings, and risk assessment process for not-for-profits. Plus, Jeanne explains the difference between procedures and policies. This distinction is important for having a good business mindset. Also, good documenting, risk assessment, and succession plans are points that auditors will want to consider.
So, why do nonprofits need to have an audit? Sometimes, an audit is required. Other times, an audit can be a valuable tool to understand the qualitative aspects of an organization. An audit will help you dig deeper! You can become a stronger charity because of it. This consideration is discussed later in Episode 3. Further, the two leaders discuss common mistakes and nonprofit fundraising, too. It’s a great discussion you don’t want to miss!
Prepare for Your Charity’s Audit
Plus, there are many benefits to having an audit. So, if you are looking for a nonprofit certified public accountant, The Charity CFO’s team of expert accountants are ready to help you work through your books. Schedule a free strategy session with us today if your auditors have started asking for spreadsheets. Or, if you are ready to take control of your nonprofit bookkeeping, we are here to help.
Lastly, if you would like to learn more about internal and external accounts with respect to the different industries, check out Jeanne Dee’s information.
The conversation doesn’t end here. Join A Modern Nonprofit Facebook Group to learn from nonprofit leaders about best audit and accounting strategies.
